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Wednesday, September 7, 2016

Adria Airways outlines future growth plans

Adria Airways has outlined its future plans after publishing its 2015 financial report this Monday, revealing a 9.2 million euro net loss. Under its new owners, the Slovenian carrier plans to become a leading regional airline by growing in three segments and connecting southeast Europe to the world. The airline will increase scheduled services by expanding its network, which will include the development of secondary airports, as well as growth in charter traffic and ad hoc charter services. It comes after the company initially downsized its operations this year. Furthermore, the carrier intends on putting a greater focus on Ljubljana as a transfer hub for passengers from the Balkans and eastern Europe towards the continent's main airports in the west. Additional emphasis will be put on management costs and cost reduction, including cuts to unnecessary passenger services and aircraft handling services. Adria plans to boost frequencies on several routes out of Ljubljana this coming winter season, including Amsterdam, Paris, Sarajevo, Warsaw and Zurich, but will not launch any new destinations by year's end.

Adria's CEO, Arno Schuster, says the carrier is on the road to recovery. "Under new ownership, the company enhanced its capital and launched intensive restructuring that will lead to an improvement in results in the business years to come". He added, "We cannot be happy with 2015's financial performance, however, good foundations have been laid through growth in some of the markets, fleet expansion, improved passenger services and new opportunities on the Estonian market, which opens up prospects for long-term relationships with regional carriers and the search for mutual synergies, which is crucial for the success and existence of regional companies in Europe".

So far this year, Adria has seen its passenger numbers decline as several unprofitable routes were discontinued. This has resulted in the airline's passenger share at Ljubljana Airport to decline to some 60%. In the coming years the Slovenian carrier will also have to address its fleet and renegotiate aircraft leasing terms. Next year, the lease for one of its Bombardier CRJ700 jets will expire, while leasing arrangements for six CRJ900s, which make up the bulk of Adria's fleet, will end in 2018, 2020 and 2022. Leases for three Airbus A319s run until 2021 and 2024.

So they will try and do more of the same by flying from secondary airports like Kukes, which we saw yesterday. I thought the experiments they had in Banja Luka and more recently Olsztyn would have taught them otherwise.

It's amazing how big the loss was in 2015 taking into account they went through years and years of restructuring. That would be acceptable prior to restructuring not after. It means the previous management did a terrible job

You've got to love this guy (CEO). He is so proud of himself for introducing new passenger fare and reintroducing free glass of water. I bet he is a turnaorund genious for coming up with the idea of reducing cost and increasing profit.

Making LJU a transfer hub? Hmm, I'm pretty sure it's been like that for ages. Has it worked? Not really.

Flying from secondary airports with airplanes that can carry up to 88 pax? Again, it's been done already (LCJ, SZY) but it doesn't seem to be working.

No worries, as long as the passengers can enjoy free water and travel with carry-on luggage only, Adria's future seems brighter than ever.

@AnonymousSeptember 7, 2016 at 9:25 AM: I would liquidate the company. Alternatively, I would start reducing the operation out of LJU and start seeking business opportunities elsewhere (worldwide). However, that is difficult at best with CRJ. Back in 90s and to some extent last decade, Adria was wet leasing all over the world (Costa Rica, Egypt, Libya, Greece, Turkey, ...).

Suggestion: All CRJ fleet ranging from 2×200, 3×700, 5×900, 4×1000 version to scrape fleet and maintenance costs. 100 seater sofa ARE enough for that market - at least for next few years.Solely operate from LJU - clear focus on it as hub to operate in SE Europe to destinations where OU does mainly not fly to. Must have USPs and differentiate yourself from other "regional" competitors.Offer 3 daily waves in LJU to daily (altogether) each 16 destinations NW and SE of SVN. Support this new hub strategy with high marketing invest during first 2 years. Get SVN government or Lju local authoriies to introduce "marketing support" for these routes from LJU and define them the way that practically only JP can make use of them (only for EU airlines, planes up to 100 seat, minimum 50 seats, served at least 3x pw and must have 2 Slovenian speaking flight attendents). We now know this is legal in EU thanks to W6 practice in BUD.Et voila. This would be a strong plan and sincere hope for the future. But they have to get the money for the start invest which is more than tough since they hardly have any capital left or to only take on new loans.

Adria can't afford hub and spoke model. JU might get away with it (with the introduction of long haul, bigger market, ...), but not Adria. Why would anyone transit through LJU if you can get a direct flight from TIA, SKP, SJJ, ...

The competition is too fierce. Hub model only works as long as there are point to point connections. As soon as there are, you are in trouble. Think about it, can you really offer lower price for two flights instead of one (not to mention the time it takes you to get to your destination)?

Yes, it can work - but I am not saying that it will work since we all know how troubled they are financially.

Reasons are that P2P routes from those destinations with LCC are aimed at leisure and ethnic pax. Frequencies are too low to attract major part of business passengers.Also business pax are willing to pay a lot more in average and don't mind changing a plane within 2 hours if they can avoid hours of sitting in a car in order to get from the airport to their actual final destination.

Also, OU network leaves some empty spots in Europe which they could cover and connect it to both Ex-Yu areas in Balkan as well as HU, RO, BG, AL for ex.

JU as competetion is not stronger because it has a single wide body plane, but often transfer times via BEG are too long and do cause passengers to search for other, even bit more pricier, alternatives.

But their finances will most likely be a problem - plus the smaller local market compared to HR or SRB. Fully agree on that.

Depends how much the route is unprofitable. If it is only a bit in the reds then it in the end is still on break even or slightly profitable if you count in the importance of it for transfer passengers making use of your network hence your airline. Hard to explain while driving but hope you get my point

AlsoDo you really need to pay the flight crew ? Like, every month ?And if anyone has any alternatives to jet fuel that doesnt cost more than peanut butter write to me at: ArnoSchusterliquidatingexpert@hotmail.com

"cuts to unnecessary passenger services" Like what? Everything that was there was already cut. What is left to take away? Even LCCs have some minimal basic services. If you go bellow that, there is a point where it becomes illegal.

I am following JP for a Long time and I am working in tourism for more than 20 years. We have destinations where russian Tourists are coming, why not MBX connecting with St.Peterburg and Moscow with Transfer flight to POZ/DBV/SPU? Dont get it why not. Is not a Segment that JP is turning now! Kukesi a joke, right?

I also think it would have been best to have somehow linked OU and JP together, with the support of Lufthansa. They could have created a much more competitive airline. They could have focused on Bosnia then and developed flights there too.

I have to question whether a multi hub system is profitable for Adria considering its size. Can an airline with 12 aircraft be profitable with 4 different bases (which are not that close by) with crew from different countries that have different laws and regulations.

All the crew is more or less Slovenian,since you need an excellent knowledge of Slovenian language to operate Canadian and French-made aircraft in European airspace and to read company manuals written in English. Of course this is only when you see job ad in Slovenia. Meanwhile, they hire couple of people behind the curtain who don't speak Slovenian :) Somebody should give them award for equal opportunities employer :)

How anyone can think that transferring crews on 4/2 roster across Europe is not a recipe how to throw away a lot of money, is beyond me...

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